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Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Tuesday, June 14, 2016

Krishi Kalyan Cess

There
are some of the points which should be considered by the Assessee regarding Krishi Kalyan Cess:

1.Krishi Kalyan Cess is a new cess introduced by
Government of India through Finance bill 2016. It is to be levied at rate of
0.5% on value of all Taxable services. As stated by the Finance Minister , collection from Krishi Kalyan Cess (abbreviated
as KKC), is to be "exclusively used for financing initiatives relating to
improvement of agriculture and welfare of farmers".

2.KKC is leviable on the taxable value of services
at the rate of 0.5%, with effect from 01.06.2016 as provided in Chapter VI,
clause 158 of Finance Act, 2016.

3.It should be noted that determination of value
of service in respect of KKC will be done in accordance with the service Tax
Valuation Rules i.e. Service Tax
Valuation Rules are equally applicable in relation to KKC.

4.Cenvat credit in respect of KKC is available as
per Notification No.: 28/2016 dated 28.05.2016. As per this Notification Cenvat
Credit shall be utilized only for the payment of KKC. As the cenvat credit on
KKC can only be utilized only for the payment of KKC, therefore separate
accounts needs to be maintained.

5.KKC shall
be levied only on taxable services . As per the Notification no. 28/2016 dated
26.05.2016, which provides that KKC shall not be leviable on service which are
exempt or Non-Taxable and not even on services mentioned in Negative List.

6.It must be noted that KKC is to be calculated on
the value of taxable service after availing the benefit of abatement.

7.A separate Accounting head is provided for
Krishi Kalyan Cess, which is as follows:

KKC (Minor Head)

Tax Collection

Other Receipt (Interest)

Deduct Refunds

Penalties

0044-00-507

00441509

00441510

00441511

00441512

8.In case of Reverse Charge Mechanism, the
recipient of services shall pay KKC at
rate of 0.5% along with service Tax payable by him as it is done in case of
Swachh Bharat Cess.

9.The Assessee must note that KKC shall be
disclosed on the invoice separately, in the same manner as Swachh Bharat Cess
is disclosed.